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RBI’s New Rules for P2P Platforms: A Net Positive for Lenders and Borrowers, Say Experts

CosmicTaco · 2024-08-20T17:56:49.870900+05:30

- The Reserve Bank of India (RBI) has issued amended guidelines for Peer-to-Peer (P2P) lending platforms, aiming to enhance transparency and curb irregular practices. - The new rules prohibit NBFC-P2P entities from assuming credit risk, ensuring lenders are fully aware of the risks involved and responsible for any losses due to borrower defaults. - Stricter guidelines for escrow accounts mandate that funds be transferred within one day of receipt, ensuring timely processing of transactions. - Restrictions on cross-selling products, except for loan-specific insurance, aim to reduce conflicts of interest and focus platforms on their core function of matching lenders with borrowers. - Monthly disclosures of portfolio performance and non-performing assets (NPA) will help lenders make more informed decisions, with a call for standardized formats to facilitate easier comparisons across platforms. Source: [Moneycontrol](https://www.moneycontrol.com/news/business/personal-finance/rbis-new-rules-for-p2p-platforms-a-net-positive-for-lenders-borrowers-say-experts-12801755.html)

The Reserve Bank of India (RBI) has issued amended guidelines for Peer-to-Peer (P2P) lending platforms, aiming to enhance transparency and curb irregular practices.
The new rules prohibit NBFC-P2P entities from assuming credit risk, ensuring lenders are fully aware of the risks involved and responsible for any losses due to borrower defaults.
Stricter guidelines for escrow accounts mandate that funds be transferred within one day of receipt, ensuring timely processing of transactions.
Restrictions on cross-selling products, except for loan-specific insurance, aim to reduce conflicts of interest and focus platforms on their core function of matching lenders with borrowers.
Monthly disclosures of portfolio performance and non-performing assets (NPA) will help lenders make more informed decisions, with a call for standardized formats to facilitate easier comparisons across platforms.

Source: Moneycontrol